Glossary

Take a look at our glossary of financial terminology related to trading and the markets.

Consult our dictionary of financial terms referring to trading and the markets

A

Acquisition

An acquisition occurs when one company decides to purchase another. The acquiring firm will do this by purchasing either the majority or the whole ownership share of the other company.

Assets

An asset is a financial resource that may be held or controlled to generate a profit or a future benefit. The term asset refers to what is traded on markets, such as stocks, bonds, currencies, or commodities.

Automated trading

Automated trading, often known as algorithmic trading, is the use of algorithms to place trade orders.

B

Base currency

The word base currency has two major definitions in trading: it is the initial currency quoted in a forex pair or it is the accounting currency used by banks and other organizations.

Bear market

A bear market occurs when the market has been trending downward for an extended period of time, with little hope among traders for a rally..

Bearish

Being bearish in trading means you believe that a market, asset, or financial instrument is going to experience a downward trajectory. Being bearish is the opposite of being bullish, which means that you think the market is heading upwards.

Bid

The bid is the amount a party is willing to pay in order to purchase a financial instrument in trading and investing.

Blue-chip stocks

Blue-chip stocks are the shares of firms that are well-known, financially solid, and have a long history in their industry. 

Bonds

Bonds are a type of financial investment in which money is loaned to a company for a certain period of time. Depending on the sort of organization you're financing to, they typically come in two varieties: corporate bonds and government bonds.

Broker

A broker is an independent individual or business who organizes and executes financial transactions on behalf of another party. They can accomplish this across a wide range of asset types, including equities, currency, real estate, and insurance. A broker, usually charges a commission for the order to be completed.

Bull

Bulls are speculators who feel that a market, instrument, or sector is on the rise. This viewpoint pits them against bears, who are negative about a market's trajectory.

C

Closing price

A closing price is the last level at which an asset is traded before the market is closed. They are usually used as a marker when looking at movements for a long time. Traders compare them to previous closing prices to understand better an asset's movement over time.

Commission

A commission is the fee charged by an investment broker for executing transactions on behalf of a trader.

Commodity

A commodity is a simple physical asset that is commonly referred to as a raw material in the manufacture of goods or services.

D

Day trading

Day trading is a short-term investing method that includes closing off all deals before the market closes.

E

Exchange

An exchange is an open market for commodities, stocks, securities, and other instruments.

F

Forex

Forex is the process through which market players exchange one currency to another. It is variously known as a foreign exchange.

Fundamental analysis

Fundamental testing is a procedure of determining an asset's underlying worth and examining the factors that may impact its price in the future. External events and effects, as well as financial statements and industry trends, are used in this type of research.

Futures contract

Futures contracts are an agreement between two parties to exchange an item at a predetermined price on a future date. They are also commonly referred to as 'futures.'

G

GDP

GDP is an abbreviation for gross domestic product, which is the total worth of goods and services generated in a country during a certain time period. It is used to measure the size and health of a country's economy.

H

Hedge

A hedge is an investment or transaction that is meant to decrease your current risk exposure. Hedging is the practice of decreasing risk through investing.

I

Index

In trading, an index is a combination of financial assets used to provide a performance indication for a certain sector.

Indices trading

Indices trading is the process through which traders seek to benefit on indices' price changes.

L

Leverage

Leverage is a notion that allows you to increase your exposure to a financial market without contributing more money.

Long position

Long is a trading term that refers to a position that profits if the market price of an asset rises. Usually used in the context of ‘taking a long position' or ‘going long.'

Lot

Instead of a single asset, a lot is a standardized group of assets that are traded.

M

Margin

Margin is the amount of money necessary to start and maintain a leveraged position in trading.

N

Net income

Net income is a company's overall profit (also known as profits) as shown in its earnings report.

O

Open

In investing, the term open can refer to a variety of concepts. It can relate to the daily opening of exchange as well as an unfilled or closed order.

P

Pip

A pip is a measurement of movement in forex trading, defined as the smallest move that a currency can make.

R

Risks

In trading, risks are how an investment can end up losing money.

S

Scalp

A scalp in trading is the act of opening and then closing a position very quickly, in the hope of profiting from small price movements.

Shares

Shares are the units of the ownership of a company, usually traded on the stock market. They are also known as stocks or equities.

Shares trading

Shares trading is the buying and selling of company stock – or derivative products based on company stock – in the hope of making a profit.

Spread betting

Spread betting is a leveraged financial derivative. When spread betting, you are making a bet on the direction in which a market will move. The accuracy of your bet determines the profit or loss when the position is closed.

T

Trading plan

A trading plan is a strategy constructed by an individual trader to optimize asset evaluation, risk management, trading types, and goal setting. Most trading plans will have two parts: long-term trading objectives and a strategy for attaining them.

Trend

A trend occurs when a market makes a clear, persistent upward or downward motion. Identifying the start and end points of trends is an important aspect of market analysis. Trends can be applied to specific assets.

V

Volatility

A market’s volatility is its likelihood of making major, unforeseen short-term price movements at any given time.